Hartford Business Journal

8 Hartford Business Journal • August 7, 2017 www.HartfordBusiness.com Tax preparers, financial advisors face tougher CT oversight By Karen Ali Special to the Hartford Business Journal S tate lawmakers passed multiple laws this year that toughen oversight on two key professional servic- es sectors — financial planners and tax preparers. Both aim to crackdown on what proponents say are unscru- pulous practices employed by some individuals and compa- nies that help people with their finances or taxes. "It's pretty much the wild, wild west out there," said Kevin Sullivan, commissioner of the Department of Revenue Ser- vices, referring to commercial tax preparers in general. "No one knows who these prepar- ers are, their qualifications or business practices." Sullivan's office pushed for the tax preparers' law, which has been signed by Gov. Dan- nel P. Malloy and goes into effect gradually starting Oct. 1. By 2019 it will require com- mercial tax preparers who aren't currently regulated to register with the state. It also prohibits tax preparers from imposing a fee for facilitating a refund anticipation loan, which is typically arranged by a lender that gets repaid from a borrower's federal or state personal income tax refund. The bill, among other safeguards, also prohibits a tax preparer from involving a third party that charges interest or a fee for brokering a refund anticipation loan. State Rep. Jason Rojas, (D-East Hartford), co-chair of the Finance, Revenue & Bonding Committee, said the law isn't intended to clamp down on certified public accoun- tants or companies like H&R Block and Jackson Hewitt, but to regulate "pop ups," many of which open up around tax time. Often these preparers have no special background in taxes and they are hired on a "seasonal basis," Rojas said. Tax preparers who are already regulated — including accountants, attorneys, individual enrolled agents, and IRS qualified volunteers — are exempt from the new law. "The Department of Revenue Services didn't think there was enough regulation," Rojas said. "Some [tax preparers] were charging astronomical fees." Rojas said there was no testimony on the bill from either side, something he was "amazed about." But he suspects as the law goes into effect, more people affect- ed by it will speak out. In written testimony, Sullivan said the tougher over- sight is warranted because his office is seeing increased evidence of preparers' errors, unfair practices "and even fraud." That includes tax preparation by companies that set up shop to do work in time for the tax season but then van- ish from the marketplace after the season is over. Protecting seniors Meanwhile, the new restric- tions on financial planners are already in effect and are mainly aimed at protecting seniors, said state Rep. Matt Lesser, (D-Middletown), co-chair of the Banking Committee. The law establishes adver- tising and disclosure require- ments for financial planners not regulated by state or federal law, and prohibits those planners from advertising or promoting that they have special training, education or experience serving senior citizens unless they meet certain education requirements, including having an academic degree or certification from an organization accredited by the American National Standards Institute or National Com- mission for Certifying Agencies. Financial planners must also disclose if they have a fiduciary duty to the consumer. Early on, the proposed legislation was wider rang- ing and attempted to aggressively regulate all financial planners, Lesser said. "This is limited to protecting seniors," he said. The law faced early resistance from the Insurance Association of Connecticut, which represents insurance and financial services institutions, because it would have "created duplicative and burdensome new regulations," said Dallas Dodge, IAC's vice president. However, Dodge said the bill was amended to elimi- nate conflicts with existing state and federal laws and is focused on only a small subset of financial advi- sors. "The insurance and financial services industry provides tens of thousands of jobs in Connecticut, and the IAC and American Council of Life Insurers are appreciative that lawmakers listened to our concerns and improved the bill," he said. n Q&A CT expands anti- discrimination protections for pregnant employees Q&A talks with attorney Miguel Escalera, of Hartford law firm Kainen, Escalera & McHale, about a new state law that expands pregnancy anti-discrimination protections. Q: State lawmakers recently passed a law expanding employ- ment protections provided to pregnant women under the state's anti-discrimination law. What does the new law entail? A: This new law represents a simple strengthening of an existing statute. Among the more significant new pro - visions, it is now also unlawful: • To fail or refuse to make a reasonable accommodation for an employee or person seeking employment due to her pregnancy, unless the employer can demonstrate that the accommodation would impose an undue hardship; • To force an employee or per- son seeking employment affected by pregnancy to accept a reasonable accommodation if the employee or person seeking employment does not have a known limitation relat- ed to her pregnancy, or does not require a reasonable accommoda- tion to perform the essential duties related to her employment; and • To require an employee to take a leave of absence if a rea- sonable accommodation can be provided in lieu of such leave. Q: The Connecticut Busi- ness and Industry Association submitted testimony arguing that both state and federal law (prior to this bill pass- ing) already provided preg- nant women protection from discrimination. Is the new law going to be an onerous man- date for employers? How does it differ from current state and federal law? A: In addition to adding some new provisions as stated above, a few older provisions of the state law have been deleted, including the provisions requiring employers to inform employees that they must give written notice of a pregnancy in order to be eligible for transfer to a temporary position, and the provision requiring the employer to transfer a pregnant employee to any suitable temporary position that may be available. The protections that a preg- nant woman enjoys under federal law remains unaffected by the strengthening of the state law, and do not materially differ from those contained in the revised state law. However, under federal law, it still remains unlawful for an employer to, among other things, single out pregnancy-related conditions for special procedures to determine an employee's ability to work or treat a pregnant employee differently than any other temporarily dis- abled employee. Also employers must allow pregnant employees to work as long as they are able to perform their jobs. Q. The new law requires employers to make "reason- able accommoda- tions" for preg- nant women. What are "reasonable accommodations?" A: In the House bill, "reasonable accommoda- tion" means, "being permitted to sit while working, more frequent or longer breaks, periodic rest, assistance with manual labor, job restructuring, light-duty assign- ments, modified work schedules, temporary transfers to less strenu- ous or hazardous work, time off to recover from childbirth or break time and appropriate facilities for expressing breast milk." Q: How often are employ- ers targets of discrimina- tion lawsuits from pregnant employees? A: Employers in Connecticut remain subject to lawsuits by employees for multiple reasons, and pregnancy discrimination lawsuits continue to be a signifi- cant component of such lawsuits, particularly in conjunction with claims asserted in connection with interference for exercising the right to take family and medical leave or being retaliated against for taking family and medical leave under the state or federal family and medical leave laws. The most common complaint in a pregnancy discrimination lawsuit is that an employer has terminated an employee near the time the employee gave notice that she is pregnant. While pregnancy discrimination lawsuits have remained steadily problematic for employers over recent years, we anticipate that the additional "rea- sonable accommodation" burdens now imposed under state law may lead to an uptick in complaints in the months ahead. n MIGUEL ESCALERA Attorney, Kainen, Escalera & McHale FOCUS LEGAL & COURTS State Rep. Jason Rojas, (D-East Hartford), co-chair of the Finance, Revenue & Bonding Committee. Kevin Sullivan, commissioner of the Department of Revenue Services, said the commercial tax prep industry is akin to the wild, wild west. P H O T O | C O N T R I B U T E D P H O T O | H B J F I L E

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